The Supreme Court has given the central government 2 weeks to take a concrete decision on the loan moratorium (installment payment deferment) case. On Thursday, a three-judge bench headed by Justice Ashok Bhushan said that the Central Government and the RBI are being given this last chance to decide on the Moratorium. Also, the court has extended the loan moratorium to 28 September. The Supreme Court has said that banks should not declare a Non-Performing Asset (NPA) till the repayment of any loan until this period. The next hearing will be on 28 September only.
Ongoing conversation with banks and stakeholders
The Center told the Supreme Court that it was in talks with banks and other stakeholders regarding the matter. Two to three rounds of meetings have been held in this regard and the case is being tested. The Supreme Court has also asked the Central Government to consider a petition that does not charge interest on interest. Also asked not to downgrade the credit rating of the borrowers.
Argument for customers taking loan
In the last hearing, senior advocate Kapil Sibal, on behalf of a group of customers and the Maharashtra chapter of the construction industry, had said that many people will default in loan payments if the moratorium does not increase. In this case, the expert committee should prepare a sector-wise plan. Advocate A Sundaram, on behalf of CREDAI, an association of real estate developers, had argued that it is wrong to collect interest from customers in Moratorium. This may increase non-performing assets (NPAs) in the coming years. Advocate Ranjit Kumar, on behalf of the Shopping Centers Association of India, had said that people are facing problems due to Corona. Measures should be taken to relieve them. RBI cannot just speak like a spokesperson for banks.
Lone Moratorium facility ends on 31 August
Considering the economic impact of the corona infection, the RBI provided the moratorium facility for three months in March. The facility was implemented for three months from 1 March to 31 May. Later it was extended by three more months till 31 August by RBI. That is, a total of 6 months moratorium facility has been given. On August 31, the facility is over.
What is Moratorium?
When the financial condition of the borrower deteriorates due to any natural or another calamity, there is a period of delay in payment on behalf of the borrower. The lockdown was also imposed in the country due to the Corona crisis. Due to this, a large number of people had a job crisis. To deal with this crisis, the RBI provided a 6-month moratorium. During this period, borrowers of all types were allowed to pay installments.
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